Monday, May 28, 2012

The Only Bet That Always Pays Off

I’m not a
betting man, at least not here in Massachusetts,
which in just a few years will roll the dice as one of the newest states to
gamble on legalized casinos. With
visions of a bountiful jackpot for the state budget, the governor and legislature
are going all in and betting that Bay Staters will morph into Bet Staters.Not me—I don’t like the odds. The house
always win.No bets for me.

Yet I confess
I do gamble. It’s not on cards or craps or the horses. No: my gambling happens
in the stock market, which in many ways is the biggest collective bet of
all.The stock market, stock markets
actually, all around the world: New York, London, Tokyo, Moscow, Beijing,
etc.According to the website
seekingalpha.com, the total market value of all these stocks is $48 trillion,
give or take a few trillion, on any given day.That’s $48,000,000,000,000: lots of zeros in that number.

24/7, all
year round, some place, some where, traders buy and sell stocks in hundreds of
thousands of businesses. They “bet” on behalf of institutional and individual customers,
like you and I, that a stock will rise or fall in the hope is that their gamble
will pay big money.

We all
gamble on Wall Street. If you’ve got a 401K or a traditional pension you are a
part of the bets placed everyday.If
you’ve got a savings account at the local bank or an equity account at Fidelity
or the like, you are playing the odds.If you own a house with a mortgage some institution somewhere which
holds that paper may be reselling that debt to someone else and seeking to turn
a buck in the process.

When
markets go up it is all good.The
economy hums.Stockholders and financial
companies make money.Capitol is
available for new business ventures, new equipment and new hires.And we little investors get to go along for
the ride and celebrate as our nest egg increases.But when the markets tank, when the ticker
plummets, when a bet is wrong and billions are lost, then we remember it is all
finally a gamble. A bet.

Just ask Jamie
Dimon or Mark Zuckeberg, two CEOs who in the past weeks learned how
unpredictable markets are, impossible to call a sure bet.Dimon is CEO of JPMorgan Chase, the largest
bank by deposits in the United
States.His firm lost $2 billion dollars in risky derivative bets made out of
the bank’s London office this month.CNNMoney
reports the actual loss may be closer to $6 billion. Dimon has publically and
profusely apologized for the loss, let go the errant trader, and reassured
anyone who would listen that the bank has, “a fortress balance sheet” and has
learned its lesson.At the same time
JPMorgan Chase’s stock price dropped by up to 20 percent, meaning a loss for
its shareholders of another $30 billion in value. Talk about a bad bet.

Then
there’s Zuckeberg, founder of Facebook, the social media giant that last week
rolled out the third largest initial public offering of stock ever.The good news? At $37 per share,
Facebook raised more than $16 billion which made Zuckeberg and several other
investors millionaires and even billionaires. The bad news?The stock, which was supposed to soar upwards
according to “conventional wisdom” instead sunk by as much as 19 percent in the
days after the IPO. Rolled the dice but
all that came up was snake eyes.

When it
comes to the gamble of the markets, all bets are off. For a bet is just that, a
bet. It would not be a bet unless there was a real chance of losing.This rule applies in a backroom poker game
and on the trading floor, in fact in all of life. There are finally few things
which qualify as a sure thing or money in the bank. Not that we humans don’t
try to find our ace in the hole.

We bet that wealth will make us happy and
find out money cannot buy contentedness. It’s not for sale at any price. We
seek the comfort of possessions and discover these things are but a fool’s gold,
and eventually rust and fall apart.We
double down on substances that numb us for awhile but in the morning leave us
empty.We wager that busyness is the
ticket to fulfillment and learn that a full calendar does not equal a full
heart.

It’s natural to seek a sure bet, but perhaps
we’re looking for a spiritual payoff in all the wrong places. Think: if you had
to go “all in”, bet the house, your life on just one thing, on a power, a
truth, a reality, who or what might that be? For folks of faith the answer is simple and
two fold: God and love. God, the Higher Power, the Universe, the Force, which
holds it all together.Love, the one
human bet that always wins, always makes the world a better place, always makes
this life worth it and filled with purpose, and always comes back to us,
doubled, even tripled in value.

So these
days the markets may be undependable and fickle. The dice of life are thrown
and fall randomly.But there’s one bet
that beats the house consistently.As
Albert Einstein said, “God doesn't play dice with the world."